The biggest threat to a business when it comes to its assets doesn\'t come from

Question

The biggest threat to a business when it comes to its assets doesn't come from outside the business, but from inside the business. Company employees pose the biggest threat. This is especially hurtful to small businesses who rely on only a few employees to run the day to day operations. When a small business suffers a major loss of assets, it can often result in the business closing down. What can be done to help small businesses combat and deter this threat? Please answer this question thoroughly using facts and cite all sources used.

Explanation / Answer

Small Business owners are rightly concerned – or should be. Employee misdeeds take many forms:

Companies that insure small businesses against fraud have become alarmed by the losses and encourage owners to become even more vigilant.

The biggest threat to a business when it comes to its assets doesn't come from outside the business, but from inside the business. Company employees pose the biggest threat. This is especially hurtful to small businesses who rely on only a few employees to run the day to day operations. When a small business suffers a major loss of assets, it can often result in the business closing down.

So,for this Discussion The owner of small business should take following measure to protect it's business from employe's threat

Supervise employees closely. Not surprisingly, studies show that when supervision is lax, theft and fraud rates go up. This doesn’t mean looking over their shoulder every minute. But it does mean checking what they do. It’s also wise to have more than one person looking out for your money.

Use purchase orders. The payment, receipt and preparation of purchase orders should be separate functions and handled by different individuals. Use serially pre-numbered purchase orders and always verify incoming orders.

Control cash receipts. Use serially pre-numbered sales slips and conduct weekly audits. Balancing of sales slips and register receipts should be done by someone other than the sales clerk.

Install computer security measures. Understand your computer systems and software, and how they might be used to divert money or inventory. Restrict access to computer terminals and records. Periodically change entry codes and check regularly to ensure that security procedures are in effect.

Track your business checks. Always use pre-numbered checks, with amounts and payees typed or written in permanent ink. Producing all checks from financial software such as QuickBooks is highly recommended. Lock blank checks and a signature machine, if you have one, in a secure place.

Manage inventory and use security systems. Separate receiving, store keeping and shipping functions. Physical inventories should be done annually by individuals who are not responsible for inventory records. Some businesses also install security devices to monitor merchandise or inventory.

Beware of accounts receivable. Make mail-opening and posting separate functions. Record checks and cash in appropriate registers and stamp checks for deposit only

Use informal audits. Make unannounced internal audits and have a yearly audit performed by an outside firm.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.